Forms of

business
organizations
Sole Proprietorship
 A type of enterprises that is owned and run by
one person and in which there is no legal
distinction between the owner and the business
entity.

 Itis the easiest type of business to establish or

take part due to a lack of government regulation
Where to Register?
 Department of Trade and Industry (DTI)
 Local Government Units
Barangay
Mayor’s Office
 Bureau of Internal Revenue (BIR)
 If you have employees:
SSS ; Philippine Health Insurance Corporation ; Home
Development Mutual Fund
Requirements for Business
Registration

 Register your business name at DTI

 Register in your Barangay
 Register in Mayor’s Office
 Register your business in BIR
Partnership
• GENERAL
- both owners invest their money, property, labor, etc. to the business and are both 100% liable for
business debts
- partnerships do not require a formal agreement—partnerships can be verbal or even implied
between the two business owners

• LIMITED
- allow partners to limit their own liability for business debts according to their portion of ownership
or investment.
- creditors cannot go after the personal assets of the limited partners.

 - require a formal agreement between the partners

 Partnership Legal Agreement
 Partnership name Profit/Loss distribution
 Purpose of the Partnership Management and voting requirements
 Partner information Partner addition and withdrawal
 Capital contributions Partnership dissolution
 Ownership interest
 ADVANTAGE
• It is easy to establish
• Separate legal status gives liability protection.
• Profits are taxed only once.
• Partners may have complementary skills.
• Shared resources provides more capital for the
business
• Each partner shares the total profits of the company
• Similar flexibility and simple design of a
proprietorship
DISADVANTAGE
• Partners are jointly and individually liable for other
partners’ actions.
• Profits must be shared with the partners.
• Decision making is divided.
• Selling the business is difficult—requires finding new
partner
• Partnership ends when any partner decides to end it
CORPORATION
- a legal entity that is separate and distinct from its owners.
Corporations enjoy most of the rights and responsibilities
that individuals possess: they can enter contracts, loan and
borrow money, sue and be sued, hire employees, own assets,
and pay taxes. Some refer to it as a "legal person."
• A corporation is a legal entity that is
separate and distinct from its owners.
Corporations enjoy most of the rights and
responsibilities that individuals possess.
• An important element of a corporation is
limited liability, which means that
shareholders may take part in the profits
through dividends and stock appreciation
but are not personally liable for the
company's debts.
• Corporations are not always for profit

KEY
TAKEAWAYS
 The Creation of a Corporation 
 A corporation is created when it is incorporated by a group
of shareholders who have ownership of the corporation,
represented by their holding of common stock, to pursue a
common goal. A corporation's goals can be for-profit or not,
as with charities. However, the vast majority of
corporations aim to provide a return for its shareholders.
Shareholders, as owners of a percentage of the corporation,
are only responsible for the payment of their shares to the
company's treasury upon issuance.
 Becoming a Corporation 
 The process for forming a corporation varies according to
the state you do business in and the state you live in. For
the most part, you'll need to file articles of
incorporation with the state and then issue stock to the
company's shareholders. The shareholders will elect the
board of directors in an annual meeting.
 The Day-to-Day Operations of a
Corporation 

 The shareholders, which generally receive one vote per share,

annually elect a board of directors that appoints and oversees the
management of the corporation's day-to-day activities. The board of
directors executes the corporation's business plan and must take all
the means to do so. Although the members of the board are not
generally responsible for the corporation's debts, they owe a duty of
care to the corporation and can incur personal liabilities if they
neglect this duty. Some tax statutes also provide for the personal
liabilities of the board of directors.
Special Considerations: The Liquidation
of a Corporation 
 When the corporation has reached its objectives, its legal
life can be terminated using a process called liquidation or
winding up. Essentially, a company appoints a liquidator
who sells the corporation's assets, then the company pays
any creditors and gives any remaining assets to the
shareholders.